Early market choppiness ended with a drop in equities in the trading session Tuesday, as gold prices slumped to a three-month low and pulled the materials sector into a spiral.
The S&P 500 was down 0.5%, the Dow Jones Industrial Average fell 0.5%, and the Nasdaq slid 0.2%. Stocks had spent the morning flitting between gains and losses.
Technical analyst Helene Meisler of Real Money, TheStreet's sister site for active traders, wrote that she's watching the Dow Jones Utility Average, which has tumbled for days to close Monday at 659.26. Meisler said a meaningful breakdown below 655 would be a bad sign for the broad market. Click here to check out her latest technical analysis.
Gold prices fell to their lowest level since the late-June Brexit vote as the U.S. dollar marched to a two-month high. Spot gold fell 3% on Tuesday afternoon to $1,269.70 an ounce, its worst one-day percentage decline since December 2013. Gold broke below the key support level of $1,300 an ounce, a level it has not breached since late June.
A selloff in gold hit the materials sector hard. Gold companies Barrick Gold (ABX) , Newmont Mining (NEM) , Goldcorp (GG) , Randgold Resources (GOLD) , and Kingross Gold (KGC) were all sharply lower. The SPDR Gold Trust ETF (GLD) slid 3.5%.
Stocks also pulled lower on reports the European Central Bank could begin winding down its quantitative easing program earlier than its targeted March 2017 end date. The central bank currently repurchases €80 billion (nearly $90 billion) a month, a program it could pare by €10 billion at a time, according to Bloomberg. ECB officials had previously expressed openness to extend the program beyond its March target, if need be. In a statement, the ECB said members had not discussed the possibility of ending sooner.